Taper energy unit costs

Today the price we pay for electricity is tapered so that the price up to a certain usage threshold is more expensive (per kWh), after this threshold any additional energy used is charged at a cheaper unit price. This means that those in large houses (typically the better off) are being subsidised for their high energy use by those who are more energy efficient. The unit price should taper the other way, with energy getting more expensive, the more of it that you use.

Why the contribution is important

Today the price we pay for electricity is tapered so that the price up to a certain usage threshold is more expensive (per kWh), after this threshold any additional energy used is charged at a cheaper unit price. This means that those in large houses (typically the better off) are being subsidised for their high energy use by those who are more energy efficient. The unit price should taper the other way, with energy getting more expensive, the more of it that you use.

by CatPayne on September 08, 2022 at 11:21AM

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Comments

  • Posted by Tony September 08, 2022 at 12:03

    This approach unfortunately also effects people in older housing stock which is poorly insulated and often off the gas grid so have a higher use of electricity than houses in city centres.

    It also will effect people with disability's disproportionately - medical equipment at home is very energy hungry and will increase units used.

  • Posted by CatPayne September 08, 2022 at 15:07

    Absolutely there should be provisions to ensure that people with disabilities (for example those on the current 'vulnerable consumer' registers held by energy companies) to ensure that all energy consumed by their households is at the lower rate. But there is an argument for other people who are living in properties which are larger than needed a situation which is contributing to a lack of affordable housing for families, that this could help to motivate single person households to move to accommodation which better meets their needs and which allows them to live more comfortably and maintain their health and wellbeing. We also need to address the fact that the richest segment of the population has a disproportionately large carbon footprint and their energy consumption should not be subsidised by poorer households by discounting unit prices the more energy you use.

  • Posted by Tony September 08, 2022 at 22:47

    I agree that there's an argument for motivating people to move to more suitable properties but if I look at my neighbour. She was born in the house, got married and lived in the house, had children in the house and is now widowed at lives in the house. Asking her to move out of a home full of memories would seem to be unfair. She'd rather freeze than move.

    The other wrinkle in this is that near me the houses which are owned by the rich are highly insulated, solar PV, heat pump and so on. They use less energy than the 2 bedroom cottages next door. The approach suggested could mean that the poor end up subsidising the rich.

    It's a complex issue but one that deserves discussion.

  • Posted by jennifersjoberg September 09, 2022 at 12:22

    This should be for the whole energy used including gas. The current system is very unfair to people who live off the gas grid. As electricity becomes greener and provided the electricity distribution and transmission network are up to muster and the energy efficiency of properties improves there should be an incentive to transition to all electric, through the use of heat pumps, we will also see an increase in electricity use for transport.

  • Posted by dennywalker September 10, 2022 at 20:33

    100% agree with Cat consumers must be "encouraged" to reduce energy use and one way is to make it more expensive the more you use . The first tier of energy use should be at an affordable level for all. Also abolish standing charges!

  • Posted by Tony September 11, 2022 at 17:34

    Devil's advocate again.

    If you put electricity into tiers the only people who will be able to afford to use electricity without worrying are the rich. If you are poor or on a fixed income you may be forced to ration electricity which could mean issues in a cold winter where more energy is needed.

    Encouraging people to save energy is a great idea but replacing appliances and insulating homes is expensive - poorer households will have a lower ability to replace and insulate due to costs and so will suffer in the same way as with the current crisis - people in poor quality housing suffer more than rich people in good quality housing.
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